Green Investment Challenges in European Firms: Internal vs. External Resources

Abstract

This paper examines the impact of internal and external resources on the adoption of eco-efficiency actions by European firms. The empirical analysis is based on an ordered logit model on data from the fifth wave of the Flash Eurobarometer survey (2021) for a sample of 9158 firms. We obtain three main results. First, we show that internal and external financial resources are positively correlated with firm eco-innovations, but the association with the former is stronger. Second, we observe a high degree of complementarity between public and private funds. Finally, besides financial resources, both in-house technical expertise and external non-financial assistance seem to play an important role for the implementation of eco-efficiency actions at the firm level. These findings have some relevant policy implications. European policy-makers should increase opportunities for public co-financing, while providing support to firms for developing the necessary competencies to enable green investments.